Coal Authority (Compensation Procedures)

Debate on the Address – in the House of Commons at 4:50 pm on 26th May 2016.

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Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West 5:41 pm, 26th May 2016

I rise to discuss the case of my constituents, Mr and Mrs King of No. 61 Myrtle Terrace, Tipton, Mrs Freeman of No. 59, and Mr and Mrs Shaw of No. 57, all of whom purchased their homes between 1975 and 1980. Prior to purchasing their homes, and as a condition for receipt of a mortgage, they were required to have a search for mine shafts in the immediate vicinity of their properties. It was conducted by the National Coal Board, which is now known as the Coal Authority.

All of the searches confirmed that the properties were “clear” of any mine shafts. I have a copy of the letter sent to Mr and Mrs King’s solicitors from the NCB surveyor. It is dated 12 November 1980 and states clearly that

“the property is clear of disused mine shafts and adits as shown on our records.”

Fast forward to 2011: the Coal Authority wrote to the owners of these properties, indicating that it wished to carry out an inspection for old mine workings in the immediate vicinity. Imagine their surprise and horror when, following the inspection, it was confirmed that Mr and Mrs Shaw had a mine shaft immediately under their kitchen floor and that both of the other properties had shafts very close by in their gardens. It is fair to say that it was most homeowners’ worst nightmare. I reassure the street’s other residents by emphasising that the inspection identified no other mine shafts in the immediate locality.

It appears that the location of the shafts was identified on maps from 1870—I have a copy of one myself. The Coal Authority and its predecessor body, the NCB, had maps with these locations in their possession, certainly since 1936. It would appear that when the surveyor certified the location as clear from mine shafts, they totally failed to identify them from the records that they had in their possession.

My constituents have had extensive correspondence with both the Department of Energy and Climate Change and the Coal Authority, neither of which will accept responsibility for the inaccuracy of the original NCB report, and they have been met with nothing more than an evasive smokescreen designed to obscure the relative level of their culpability.

When confronted with such evidence, the usual tactic of the Coal Authority has been to give reassurances on safety and to point to compensation schemes that are available in the event of damage or subsidence arising from instability. That ignores completely the stress arising from the doubt and uncertainty caused by these revelations and the wider financial implications of purchasing a house with mine shafts underneath or in the immediate vicinity. Those concerns were not helped by the fact that in 1999, which is in most people’s recent memory, a house in nearby Moxley disappeared down a mineshaft and, I believe, subsequently a considerable number of adjacent properties had to be demolished.

The safety of the houses is not the only concern; residents are also worried about the reduction in the resale value of their properties. The Department of Energy and Climate Change, in correspondence with the residents, has suggested that the Coal Authority has no responsibility in relation to property devaluation and that its responsibility is limited to subsidence claims, which may, in some cases, result in the loss of value. To counter that, the residents obtained an independent evaluation, in which the surveyor suggested that

“usually the likelihood of subsidence problems related to old mine shafts is remote, and consequently the location of a mine entry should not significantly alter the value of a property.

However, the public’s perception of properties located within the zone of influence of a mine shaft is usually negative, and this is often the case with their surveyor and solicitor, upon whose advice the public rely.

From a logical perspective the value of the property should only be marginally affected. However the public perception is not always based on logic and it is likely that one will find with a resale of a house within the zone of influence of a mine shaft will prove more difficult than would normally be the case”.

That is a masterpiece of understatement. The surveyor went on to say that, from their 25 years’ experience, the location of a mine entry under a property with no records of it being filled could deduct 30% from the resale value of the property, and potentially up to 50%.

That does not deal with the added issue of mortgage lenders, who are often reluctant to lend on properties with mine shafts nearby. That is not altogether surprising, because I cannot believe that anyone would pay the full asking price for a house with a mine under the kitchen. I would not; perhaps the Minister would like to confirm whether she would. If she would, I am sure that my constituents would be interested.

My constituents have been left trapped in houses that could be sold at only a fraction of the asking price of properties of similar size in the area. They are effectively denied the option normally available to people of their generation of selling their house and moving to suitable accommodation that might be more appropriate to their needs as they get older. The devaluation of my constituents’ homes was accepted by the listing officer when the properties were revalued for council tax purposes in December 2013. The properties were revalued downwards to reflect what had happened.

By failing to provide my constituents with proper, sound advice, the NCB denied my constituents the opportunity to make an informed choice about the initial purchase of their homes. Not only would they probably not have proceeded with the purchases, but even if they had wanted to, it is unlikely that their mortgage provider—the then Midshires building society—would have given them mortgages on those properties. The residents believe that the actions of the negligent surveyor sentenced them to spending the next 25 years paying a mortgage on properties that they could never hope of selling at prices comparable with those of unaffected properties.

Residents’ demands for compensation were met with complete indifference by the Coal Authority, which resorted to a breath-taking abuse of logic to justify this indifference. The Coal Authority claims that because the information was available in 1980 to the surveyor, who failed to identify it within the time limit, but was only revealed in a subsequent inspection 31 years later, they could not claim because the time had expired. In effect, the residents are excluded from claiming because they failed to identify an error made by the National Coal Board when the only evidence that could be used to identify the error was in the hands of the National Coal Board and its successor, the Coal Authority. The only other way in which they could have satisfied that particular demand was to have taken their own initiative and to have dug up their kitchen floor or back garden to identify whether there were any rogue mineshafts.

My constituents took their case to the Parliamentary Commissioner for Administration. The ombudsman’s report confirmed maladministration in the way the Coal Authority handled their complaint, and it recommended a small sum of compensation for each complainant. It also confirmed that DECC is responsible for any errors in NCB mining reports, and criticised the Coal Authority for failing to advise the complainants of that fact. However, the ombudsman’s remit was confined to adjudicating on the process of dealing with the complaint, not on the merits of the complaint itself. Therefore, the substantive issue of compensation for my constituents is still unresolved. They are still condemned to living in houses they cannot sell at a realistic market price, as a result of mistakes made by the NCB and which are now the responsibility of DECC.

Mine searches are a vital part of the process of purchasing properties. They allow the purchaser to make an informed decision about whether they want to proceed on a property. A positive or negative search vastly affects the value of a property. My constituents paid full price for their property, based on the assumption made by the National Coal Board—the experts—that the property was clear of mines. This was clearly negligent because the surveyor clearly did not access the correct records to make the informed decision on which my constituents relied.

My constituents have done everything right. They have worked hard, got on, paid taxes and bought homes. Now, however, because of an oversight over 30 years ago by a professional specifically employed to avoid such a situation, they are unable to enjoy the fruits of their labour and are trapped in properties they have no hope of selling for their normal market value. My constituents have no way and no process by which they can have their case heard and adjudicated without recourse to a court of law. It is unjust that people of their age and financial circumstances have to invest in what might be an expensive legal process to obtain justice.

I ask the Minister and DECC to ensure that the Coal Authority treats sensitively any future complainants with issues of this nature and give them appropriate guidance about how they can best get redress for their particular concerns, as the Coal Authority clearly did not do in this case. To do that, there needs to be a change of culture and a change in the ownership of responsibility for these issues. I also ask the Minister to set up a tribunal and an adjudication service within DECC, to which people affected by such an issue—there may be many others now or in the future—can take their complaint, and have it assessed by experts and adjudicated on, so that they do not have to suffer in the way that my constituents have suffered.

Not only were my constituents denied the right to make a properly informed decision when they brought their homes, but they are now being denied the right to receive compensation for an error that was not of their making and was beyond their control, and which will have a significant impact on their finances for the rest of their lives.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change 5:54 pm, 26th May 2016

I sincerely thank Mr Bailey for securing this debate on what I fully recognise is a very serious issue for his constituents. I will start by providing some background on the work that the Coal Authority undertakes and, in particular, on its procedures relating to subsidence and compensation, which are highly relevant to his constituents’ situation.

The coalfield areas of England, Scotland and Wales cover some 26,000 sq km, or 11% of those countries’ surface area. Since the start of the industrial revolution, human settlement has followed natural resource availability, industry and employment. The coalfields are consequently some of the most densely populated parts of the UK. Some 7 million properties lie within them; 1.5 million properties lie above workings where coal has been mined at depths of less than 30 metres, and at least 172,000 coalmine entries are known about.

Although there is little active coalmining today, centuries of underground and surface extraction have created a huge legacy of environmental issues and public safety hazards. The Coal Authority was therefore created under the Coal Industry Act 1994, when the previously state-owned coal industry was privatised, to regulate the industry and manage those legacy issues. It helps DECC to manage the UK’s energy legacy safely and responsibly.

A substantial legacy of mining hazards remains in many major conurbations. One third of the 172,000 documented coalmine entries are in urban areas. Surface collapses above abandoned workings and shafts present the most common risks to the public. A 24/7 hazard line allows the public to report mining hazards around the clock, enabling immediate responses. Approximately 1,000 surface and subsidence incidents are reported each year, about half of which are found to be mining related.

The scale of the issue means that costly proactive remediation of the surface effects of shallow mineworkings and mine entries is carried out only where there is a higher risk to persons or property. Known shafts represent zones of risk. In 2008 the Coal Authority therefore began a mine entry inspection programme to identify such areas for proactive remediation. To date some 130,000 shafts have been inspected, 1% of which have required remedial treatment.

That brings me on to the remedies for property owners where coalmining-related damage occurs. In a coalmining area, a home or property may be damaged by coalmining-related subsidence. If a property has suffered such damage, there are powerful remedies under the Coal Mining Subsidence Act 1991, as amended by the 1994 Act. Responsibility for dealing with a claim rests either with a mining company or with the Coal Authority.

The authority manages the effects of past coalmining, including those subsidence damage claims that are not the responsibility of licensed coalmine operators. That includes responsibility for remedying and meeting the costs of subsidence associated with coalmines, for public safety and for administration of claims for coalmining subsidence damage from property owners.

The authority’s work on handling subsidence and safety issues associated with former coalmines is a statutory duty under both the 1991 Act and the 1994 Act. Those duties were established to protect the public and their property from the potential impacts of past coalmining. The 1991 Act sets limits to that liability by defining coalmining subsidence damage and setting time limits for liability.

Where a claim is made and the Coal Authority is found to be liable, in general it will carry out repairs to a property. Those repairs should make good the damage, but in certain circumstances the Coal Authority will pay compensation instead of making repairs. If a home becomes unsafe or uninhabitable because of subsidence damage, there are arrangements for people to be provided with, or receive payment for, equivalent alternative accommodation. If a home has been damaged by subsidence and cannot be sold at its former undamaged value, the Coal Authority may—depending on the circumstances—be under an obligation to buy it for its undamaged value. Where property has been so badly damaged that it has to be demolished, the Coal Authority will either rebuild it, or pay compensation based on its full market value in its undamaged condition. I hope that background has been helpful in setting out the size of the issue and how it is dealt with in statute.

Turning to the hon. Gentleman’s constituents in Myrtle Terrace, it is important to note that there is no statutory basis for the award of compensation for any perceived loss of market value due to the mere existence of a shaft or coal workings in the vicinity of a property. The legislation and protection that it affords covers only actual subsidence damage that has been caused by a shaft or mine entry. For the residents of Myrtle Terrace—and other residents in coalfield areas—future prospective purchasers of their properties are afforded enormous protection first by the powerful remedies of the subsidence legislation, and secondly by an insurance product on a prospective buyer’s mining search report that offers protection against loss sustained by the owner of the property, and the lender, if any new problems or adverse conditions are revealed in a subsequent coal and brine search report that were not revealed by the original report to which the policy was attached. Thirdly, the Council of Mortgage Lenders advises that the presence of a mine entry within 20 metres of a property will not, in principle, be a barrier to obtaining a mortgage.

Compared with other types of risk, such as flood risk or other types of mining, purchasers are significantly better off. No house insurance policy is required for coal subsidence, as all expenses are paid for actual damage. Although it is a matter for individual lenders and insurance companies, they have the reassurance offered by the powerful remedies of the subsidence legislation to manage their risks.

At the point of last inspection, there was no actual subsidence damage to the properties under discussion. However, if residents are aware of any issues caused by the presence of those shafts, the Coal Authority will re-inspect properties for any signs of coal mining-related damage. I completely sympathise with the hon. Gentleman’s constituents, and I realise that this will be a disappointing reply for them. However, I hope he will appreciate that it is not affordable or practical to underwrite non-existent damage for 7 million properties.

Question put and agreed to.

House adjourned.